ADR and Its Types


When we look at people in our surroundings, and the people with whom we interact in our daily lives, we come to an understanding that everybody has different modus operandi for doing things. These different ways of doing things often lead to a daily scuffle between the persons.

These conflicts are an unavoidable part of our life, and we can’t defer it, even with our maximum amount of caution. These conflicts range from trivial matters like who will sit on the first bench of class to life-changing issues, or history-changing topics, like dropping nuclear bombs on Japan by the USA. So, these conflicts need to be taken care of in a more subtle manner; and, at the right time, to not escalate to something bigger.

Alternate Dispute Resolution (ADR) is used to explain the various methods of settling legal disputes. ADR has risen in prominence in recent times. The parties can’t afford to go to court every time a dispute arises. Also, timely justice holds more significance in business and commercial disputes, and therefore, the conflicts need to be solved in a limited time frame to avoid extra costs. ADR methods’ prime focus is on maintaining the parties’ relationships, and unlike the court system, the parties don’t go against each other in an adversarial system. This system is considered very flexible as the parties get to choose the process by which they would want to govern themselves. There is a wide range of methods that can be included in the ADR. Most of them have the presence of a neutral third party, which is generally skilled in this profession and helps the parties to arrive at a solution. The term ADR includes various processes, including Lok Adalats, arbitration, conciliation, mediation, negotiation, and have been prevalent worldwide. Alternative dispute redressal techniques can be employed in several disputes, primarily civil, commercial, industrial, and family conflicts.[1] It is the preferred choice because of the inherent advantages, like less expensive, non-adherence to the intricate court processes, less time in the process, etc. Alternative dispute redressal’s goal is enshrined in the Indian Constitution’s preamble itself, which enjoins the state: “to secure to all the citizens of India, justice-social, economic and political-liberty, equality, and fraternity.”[2] ADR was formally introduced in India by the legislature by amending section 89 of the CPC and Order X Rule 1-A to 1-C, following the Law Commission of India and the Malimath Committee’s recommendations.


ADR is usually a private process aiming to resolve the dispute amicably with help from a neutral third party. While litigation in court is a public process, where disputes are settled through the court with judges, in recent times, there has been a shift in parties’ will to choose ADR over the litigation because of its advantages. Some of the benefits are:

  • Control over the proceedings: The parties to the dispute can set their terms and conditions to how they want to settle the dispute; giving the parties more control and say over the process.
  • Speedy remedy: Unlike the court system, in ADR, there are fewer formalities to be adhered to by the parties, and the parties can do away with the complex and elaborate process; in turn, reduces the time taken by the ADR process to settle the dispute as compared to the court system.
  • Finality: The appeal rights in the ADR (like the arbitral award) are minimal. Because of this, the disputes are resolved in much lesser time and achieve finality. 
  • Low Costs: The comparative costs between ADR processes and court procedures are much lesser. There are countless adjournments in the litigation system, which add to the parties’ extra cost. In the ADR process, the dispute is resolved in a short time; and thereby, leads to significantly lesser costs.
  • Privacy and confidentiality: Litigation entails open court procedures, and anyone from the public may access orders, records, etc. In other words, it is readily available in the public domain. While in the ADR process, privacy is considered of great importance, and every step is taken to ensure the final settlement’s confidentiality. 
  • Expert Opinion: Parties to the dispute can select a neutral third party as per their knowledge about the subject matter of the conflict. This gives them a chance to appoint only such people who have expertise over the subject matter. 
  • Maintaining the relationship: One of the main aims behind the ADR process is to protect the parties’ relationship to the disputes. In a litigation system, they become adversaries, as it is about winning and losing the case. While in the ADR system, there is nothing like winning and losing; instead, the prime objective is to settle the dispute amicably. Hence, by employing the ADR process, the relationship between the parties can be maintained. 


Everything has two aspects to it, i.e., there are certain limitations in the ADR process with advantages. Some of the disadvantages are listed below:

  • No guaranteed resolution of the dispute: Other than the arbitration (where there are arbitral awards), other ADR forms don’t ensure the dispute’s resolution. So, the time and money invested in the process would become futile, and in case of failure, they again have to revert to the litigation.
  • Limits on interim reliefs: The ADR process is efficient mainly in commercial disputes, where the contention is regarding the pecuniary values. ADR is not suited for the situation where injunctions are required to settle the dispute; because, unlike the court system, the neutral third party lacks authority over the parties.
  • Unreasonably skewed in favour of one party: The ADR process is a private one, wherein the parties employ the neutral third party for the settlement of their disputes. The power dynamics of the party positively influence these processes. The stronger party between the two might introduce some clause in the arbitral agreement, which is in his favour. The final award’s integrity can be questioned if one party influences the neutral third party. 


Arbitration is an ADR mode requiring third parties’ effort to resolve disputes outside the court system. This third party is called the arbitrator, whose decision both the parties agree to be bound. It is an adjudicatory process in which the neutral party goes through the evidence produced by both the parties to decide which both parties agree. One of the prime reasons for opting for ADR is the limited amount of time within which the dispute is resolved. If the parties after the arbitration award, like the litigation system, continue with appeals and review, then its purpose is frustrated. Hence, to curb it, there are limited rights of review and appeal for arbitration awards. Arbitration is usually voluntary by the parties, but it also can be mandatory when it comes to some statute, or the terms of a contract entered into by the parties. Arbitration is the most common dispute resolution system wherein two parties enter the contract to carry out some business. The arbitration as a mode of dispute resolution can begin only when there is an arbitration agreement between the parties. Any party to the dispute can initiate the proceeding regarding the same,  depending upon the agreement between the parties, and the appointment of arbitrator except in certain circumstances is usually without question. These agreements can be decided upon by the parties and are negotiable. Any question can be raised against the arbitrator if there is some reasonable doubt regarding the arbitrators’ neutrality, or any doubt regarding his qualifications, as mentioned in the arbitration agreement. This process is governed by the Arbitration and Conciliation Act of 1996. So, it is clear that for arbitration to occur, there is a requirement of four things, i.e., arbitration agreement, a dispute between the parties, a reference to the third neutral and impartial party, and finally, an award passed by the arbitrator.


Here, the neutral third party is called a conciliator. It is an ADR process where the parties in contention take the help of a conciliator who meets with parties in private, try to hear them out, and eventually solve the disagreement between them. This process is different from arbitration in the sense that here the parties are in contact with the conciliator to a more informal level. The conciliation is a voluntary process, where the parties, even without any prior agreement, can avail the service of a conciliator for settling their disputes. This process is more flexible than the arbitration in the sense that parties can define the time, the structure, and the subject matter of the proceedings. Like arbitration, this process is also confidential. To settle the dispute, the conciliator tries to reduce the parties’ tension level, enhance the communications between the parties, interpret the conflicts, and try to reach a solution. Hence, here the conciliator in the process of settlement of dispute takes into account the parties’ legal positions, their financial status, and also analyzes the personal interest at stake in the process. Here, the conciliator does not decide for the parties. Instead, he tries to alleviate both the parties to bring about the solution by creating suitable options for both parties. This process is not binding on the parties until and unless they settle and sign the agreement. Once parties sign the deal, then it gains the same effect as that of an arbitral award. Parties may record their settlement in the form of an agreement, which then has a binding effect. 


Conciliation is handier in situations where the parties to dispute want to save their relationship and do not want it to turn acrimonious; it is why family disputes are mostly conciliated. The conciliation process begins when the other party accepts the invitation to conciliate sent by one party. Like an arbitrator, the conciliator also needs to be neutral, impartial, and lawfully carry the process. Here, the conciliator doesn’t make any award. Instead, it aids the parties to reach an agreement, and if they fail to reach one, they may prefer arbitration. The conciliation process’s biggest drawback is that even after employing all the resources for the procedure, parties may fail to reach an agreement. In such cases, all efforts taken to conduct the process go unproductive, and the parties are back to square one.


The main objective behind the process, like other ADR processes, is to aid the two parties in contention to come to an agreement and settle the dispute therein. The neutral third party involved in the process of mediation is called the mediator. The parties here themselves decide the deal they want to settle, rather than imposing it on the mediator. Mediators are usually skilled persons, who use techniques in their repertoire to help the parties to reach an agreement. To fully efficient the powers vested in him, the mediator needs to be a neutral party. Unlike the arbitration, the parties here are not bound to agree on the settlement. Hence, any agreement settled upon by the parties through the process of mediation is binding on them only till the point when they decide to be bound by it. Parties may record their settlement in the form of an agreement, which then has a binding effect. Therefore, it can safely be inferred that the parties have a total say over the mediation process’s final settlement. Mediator has no voice in the whole process, and hence it is also referred to as a win-win situation for the parties, as they have a complete say in the process. Like conciliation, the biggest drawback of the process is that it is non-binding on the parties, and hence even after the final settlement, parties are free to disagree with the final result. In such a case, all the parties’ resources and the parties get the same position at which they were before the starting of mediation. The concept of mediation is not alien to the Indian legal system, and village panchayats and Nyaya panchayats are a prime example of that. But, mediation as a process of dispute resolution has not been popular in India. The prime reason for the same is that it lacks enforcement and also a very informal process. Many people are not even aware of the process, and hence lack of awareness among the masses. 


Negotiation is a dispute resolution process that is more about the persuasive skills of the person. Parties here try to bargain the conditions between themselves. In contrast to the other methods, the parties have a full day on the process, as they control the whole process by themselves without the third party’s help. In some negotiations, the support of a neutral third party is also taken, called negotiator. It is a voluntary process with a prime focus on the communication skills of the parties. The prime objective of the process is to maximize one’s interest while negotiating with the other party—the real-life bargaining we engage in the most simple negotiation example. Any statue does not legally recognize negotiation, and hence lacks any enforcement mechanism. Also, no fixed procedure for the negotiation and parties are free to tort the process as per their convenience. Parties here try to engage with the other party till they reach the desired outcome, and is the most flexible process among all the ADR processes. Parties may record their settlement in the form of an agreement, which then has a binding effect. 


Lok Adalat is another ADR process, wherein the cases pending in the court or before the litigation are settled between the parties amicably. Lok Adalat has been given statutory recognition under the Legal Services Authority Act of 1987. Thus, it was the first ADR process which was given statutory status. Under the said Act, the decision made by the Lok Adalat is considered to be deemed a decree of a civil court, considered as final and binding, and the award can’t be appealed in any court of law. [3] However, if the parties are not satisfied by the Lok Adalat award, they are free to approach the court again with new initiation of a legal suit; because the parties’ right to litigate can’t be taken away.

The person deciding the Lok Adalat dispute is a member of the Lok Adalat, and their role is only limited to the conciliator. They can’t assume any judicial role. Their job is limited to convincing the parties to come to a settlement outside the court system, and not coerce or force them to dispute conclusively. The literal translation of the term “Lok Adalat” is people’s court. It was instituted to provide people with cheap and summary justice. The fundamental objective behind the Lok Adalat is to settle the dispute amicably by way of discussion counselling, persuasion, and by using other skills to conciliate the matter.[4] Lok Adalat is primarily used for the family disputes to restore peace. It is also prevalent in cases of business transactions, where the farmers take a loan from the bank, and they are unable to pay the whole amount on time. 


With the advent of time, ADR as a dispute resolution mechanism is getting popular, and parties to the dispute are opting more and more for ADR has been a boon for the courts, reducing the burden on them. Even though these ADR mechanisms are more advantageous than the litigation system, significantly less percentage of actual disputes are being referred for ADR. Happens because of a lack of awareness among the masses that institutions other than court settle disputes amicably; can be improved by following some steps. Firstly, ADR mechanisms need to be institutionalized, and the court should also refer some disputes to ADR if it finds the possibility of settling the dispute. The court should act as a torchbearer to improve the ADR implementation in India, as ADR complements the court system. Secondly, the masses at large should be made aware of the process, and this could be done by holding workshops, seminars, literacy street plays about the ADR. Thirdly, there should be an introduction of mediation centres in all districts of each state, which can incorporate the local public’s issues;  because many poor people can’t afford litigation even if they have been wronged for various reasons. They have very cynical views about the litigation. Setting up an ADR centre in courts would prompt them to resolve their disputes legally. Finally, the ADR process’s major drawback is that they lack enforceability, which needs to be changed, and institutionalizing the process would give more legitimacy to it. 


[1] Hindu Marriage Act, 1955; Industrial Dispute Act, 1947; The Code of Civil Procedure 1908; The Family Court Act, 1984.

[2] Preamble, Indian Constitution.

[3] Mohd. Aqib Aslam, Lok Adalat: Alternative Dispute Resolution Mechanism in India, Legal Services India, (Last Visited on September 1, 2020).

[4] S. K. Sarkar, Law Relating to Lok Adalats and Legal Aid: Being Commentary on the Legal Services Authorities Act, 1987 with Central & State Rules, (Oriented Publishing, Ist Edn., 2004). 


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